Nigeria releases $250m as first tranche to Indian firm for Ajaokuta steel settlement

By Eniola Akinkuotu
Posted on Monday, 19 September 2022 12:08

Nigeria's President Muhammadu Buhari delivers a speech during the Paris Peace Forum, in Paris, Thursday, Nov. 11, 2021. (AP Photo/Christophe Ena)

Nigeria has released $250m to Global Steel Holding Limited as part of first tranche of the $496m agreed upon by both parties over the dispute arising from the Ajaokuta steel complex. 

A Spokesman for Nigeria’s Attorney-General, Umar Gwandu, confirmed to The Africa Report.

“The first settlement of $250m was effected on Thursday 15 September 2022 to Global Steel,” said Gwandu.

The payment comes as the country continues to face foreign exchange liquidity issues due to a sharp drop in oil revenue occasioned by an opaque petrol subsidy scheme and unprecedented crude oil theft.

The Ajaokuta project, conceived as the springboard of Nigeria’s industrial take-off in 1979, has remained uncompleted ever since.

Russia vs US

The first phase of the Ajaokuta project was built by a Russian firm, Technopromexport (TPE). In 1994, the Russian firm abandoned the project when it was at 98% completion, citing Nigeria’s inability to meet its contractual obligations.

In 2001, Russia made a push to finish the complex but President Olusegun Obasanjo picked American firm, Solgas Energy, in 2004 to complete it instead. The contract was revoked due to non-performance and was subsequently handed to Global Infrastructure Nigeria Limited (GINL), owned by an Indian firm, Global Steel Holdings.

‘Agreements skewed in favour’

President Umaru Yar’Adua terminated the contract, arguing that the agreements were skewed in favour of the concessionaire. He accused GINL of stripping Nigeria’s assets and ordered that the firm be investigated for corruption.

But GINL sued Nigeria for terminating the contract and this led to a prolonged dispute which eventually culminated in a $496m settlement.

The steel plant was designed to produce 5.2 million tonnes of various types of steel products and has so far gulped over $8bn, according to official reports. However, it still has not been completed.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.

View subscription options